South Korea - Country Commercial Guide
Aerospace Industry

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-20

ITA CODE: PR AIR

Overview

 

 

2017

 

2018

 

2019

 

2020 (Est.)

Total Market Size

5,436

6,732

8,487

9,223

Total Local Production

3,969

4,714

6,028

6,298

Total Exports

2,086

2,617

2,822

2,646

Total Imports

3,553

4,635

5,281

5,571

Source: Korea Aerospace Industries Association (KAIA). Unit: USD Million.
Note: 30% decrease in civil aerospace market expected due to COVID 19 which is reflected in 2020 market size estimate

According to trade figures announced by the Korea International Trade Association, Korea was the15th largest market for U.S. aerospace exports in 2019. In 2019, total U.S. aerospace exports to Korea exceeded 2.5 billion USD (including aerospace products in the defense sector). In total value, U.S. aerospace sales constituted about 69 percent of Korea’s total aerospace imports in 2019. 

Over 98 percent of the total aerospace imports into Korea are commercial & defense aircraft and their parts and components. Of this, 69 percent of Korea’s aircraft, parts and component imports were from the U.S. in 2019. 

Category

2018

2019

2020 (est.)

Export

Import

Export

Import

Export

Import

Aircraft

Whole platform

630

2,155

499

2,810

476

2,963

Parts/Components

2,317

2,263

2,421

2,268

2,567

2,392

Space parts

19

208

20

203

21

214

Total

2,300

3,155

2,890

5,281

3,065

5,569

Source: Korea Aerospace Industries Association (KAIA). Unit: USD Million.

Major Local Players

Korea’s aerospace industry is driven by Korea Aerospace Industries (KAI: www.koreaaero.com/English/main.asp) and Korean Air, one of the largest commercial airliners in Korea. KAI and Korean Air are also the leading companies which make and assemble parts for Boeing and Airbus. KAI and Korean Air are active in developing indigenous aircraft, including UAVs, rotor-wings, and fixed wings. In 2008, KAI introduced its first non-military private aircraft, “Naraon,” making Korea the 28th nation in the world to build and fly its own indigenously produced plane. In 2015, KAI won the KF-X project - Korea’s next generation fighter jet. The Korean Government will invest 17 billion USD in the KF-X program thru 2025. Korean Air is active in providing MRO services for both commercial and defense aircraft.

There is a cluster of Korean small- and medium-sized aerospace companies in the Gyeongnam area forming a Korean Aerospace Valley. The companies within this aerospace valley focus on supplying parts and components to KAI and KAL and also exporting. Gyeongnam Export Support Corps for Aero-parts (GESCA: http://gesca.or.kr/) supports these aerospace companies and is currently actively cooperating with foreign aerospace companies for both imports and exports.

Commercial Airliners

Korean Air is the largest passenger and cargo carrier company in Korea and is one of the largest consumers of aircraft, equipment, components, and various aerospace services — as well as being one of the major exporters of aerospace parts and components.  Asiana Airlines is the second largest airline in Korea, however, it is experiencing financial difficulties.  As of April 2020, HDC Hyundai Development had postponed its acquisition of Asiana Airlines indefinitely due to the COVID 19 outbreak.

LCCs in Korea have continuously increased their operating fleets; 119 planes in 2017, 144 planes in 2018, and 167 planes expected by the end of 2019. LCCs mainly operate B737 and A320 platforms but will adopt B737MAX and A320NEO from this year to expand their routes. LCCs demonstrated a dramatic annual sales revenue growth of 40 percent in the past five years, however, due to the outbreak of COVID 19 in 2020, they have been greatly impacted and restructuring, mergers and acquisitions are expected to take place.

Airports

Korea has two state-owned airport companies, Incheon International Airport Corporation (IIAC) and Korea Airport Corporation (KAC). IIAC is the nation’s largest and has its main international airport in Incheon City. Incheon Airport has been voted the top in “airport service/quality” for ten years in a row. It has also won the highest score in the Airport Service Quality (ASQ) category by Airports Council International (ACI), which consists of 1,700 airports around the world. KAC operates a total of 14 airports in Korea (Gimpo, Gimhae, Jeju, Daegu, Ulsan, Chungju, Muahn, Kwangju, Yeosu, Pohang, Yangyang, Sacheon, Kunsan, and Wonju), of which seven have international status with routes mainly to China and Japan. 

Best Products/Services

· Aircrafts and aircraft upgrades

· Radar/surveillance devices

· Avionics

· Parts and components & MRO

Opportunities

Top U.S. aerospace exports to Korea include: complete commercial aircraft, commercial aircraft engines, equipment and parts, as well as military aircraft and their parts and components. The U.S. continues to be the dominant foreign supplier of aerospace/defense products and services, with a dominant import market share.

As smart technologies evolve, unmanned aerial vehicles is considered as the future growth industry and the Korean Government announced plans in 2019 to develop the drone industry with supporting regulation.

Although small, Korea’s space market also presents opportunities for foreign suppliers, especially in satellite launching services, high-tech sensors and optical devices for the payload systems.

KORUS FTA Impact

All U.S. aerospace exports are duty-free as of March 15, 2012 as a result of the implementation of the Korean-U.S.FTA (KORUS).

Resources

Trade Shows

Seoul International Aerospace & Defense Exhibition 2021 (Seoul Air Show 2021)
October
15 - 20, 2021 - http://www.seouladex.com/eng/main.asp  

Key Contacts

Korea Aerospace Industries Association (KAIA) – http://www.aerospace.or.kr/dbhome/user/aeroe

Korea Aerospace Research Institute (KARI) 

Ministry of National Defense (MND) -  http://www.mnd.go.kr/mbshome/mbs/mnd_eng/

Ministry of Science, ICT, and Future Planning (MSIP) – http://english.msip.go.kr/index.do

Ministry of Land, Infrastructure, and Transport (MOLIT) – http://english.molit.go.kr/intro.do

Incheon International Airport Corporation (IIAC) – http://www.airport.kr/eng/

Korea Airport Corporation (KAC) – http://www.airport.co.kr/wwweng/subIndex/4397.do

Local Contact

Ms. Sunny Park
Commercial Specialist
Commercial Service Korea
U.S. Embassy
Seoul
188 Sejong-daero,
Jongno-gu
Seoul 03141 Korea

Tel: 82-2-397-4164
Sunny.park@trade.gov

https://www.trade.gov/southkorea